Slow inflation and stagnant wage growth has baffled economists given the very low unemployment rate, but USA central bankers continue to say they expect inflation to rebound allowing them to raise the benchmark interest rate gradually.

As a result, the odds of another rate hike in December as judged by the futures market fell to 43.1 percent, from 47.3 percent a week ago.

The euro added 0.1 percent to 1.1416 against the dollar while the British pound was also 0.1 percent higher to 1.2966, a breakout of 1.2984 would likely lead the pound to a high of 1.3051.

Indeed a cursory look at the EUR/USD chart, which has extended its uptrend into the 1.14s recently, supports a continuation higher, which would be commensurate with a weaker Dollar profile.

Excluding automobiles, gasoline, building materials and food services, retail sales slipped 0.1 per cent last month after being unchanged in May.

U.S. interest rates futures rose as traders pared their view the Federal Reserve would increase rates again in 2017.

United Overseas Bank economists said on Thursday that Dr Yellen made an important point when addressing the uncertain U.S. inflation outlook.

European shares had their strongest week in more than two months as investors piled back into equities on signs that the world's major central banks would likely not tighten monetary policy as quickly as some had feared. The drop came after the USA data raised doubts about US economic growth and whether the Fed will hike rates again this year. Waiting too long to remove accommodation could eventually require the Fed to raise rates too rapidly and risk pushing the economy into recession. Retail sales rose 2.8 per cent year-on-year in June. The two-year note fell to 1.347% from 1.363% at yesterday's close, and the 30-year fell to 2.892%.

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